The Hindu Business Line : RIL declines discount request of oil retailers

Troubled waters
OMCs now propose to approach the Petroleum Ministry seeking its intervention
Sources claim RIL and Essar approached the Petroleum Ministry seeking compensation of almost Rs 1,000 crore

New Delhi , June 20

The persuasive skills of the State-owned oil marketing companies (OMCs) and the Petroleum Ministry will be put to test with the private refiner Reliance Industries Ltd (RIL) declining to offer any discounts on sale of petroleum products - liquefied petroleum gas (LPG) and kerosene - to PSU retailers during the current fiscal.

This is despite the Petroleum Ministry requesting the private and standalone refiners such as RIL and Mangalore Refinery and Petrochemicals (MRPL) to extend discounts to the OMCs in view of the heavy under realisations suffered by the retail companies due to surge in international crude prices.

Sources told Business Line that the OMCs held separate meetings with RIL and MRPL on Saturday (June 17) to negotiate discounts. While RIL has declined to extend any discounts, MRPL wanted certain issues to be resolved. Elaborating on the MRPL stand, the sources said discounts are currently calculated based on crude throughput. MRPL felt that crude used for exports should be left out and only that for the domestic market should be considered for discount purposes.

The OMCs now propose to approach the Petroleum Ministry seeking its intervention.

The Government is expecting discounts of Rs 2,500-Rs 3,000 crore, similar to those last year, from the private and standalone refiners such as RIL, MRPL, Chennai Petroleum and Kochi Refineries.

Last year, RIL had extended a discount of Rs 750 crore, MRPL gave close to Rs 290 crore and the rest came from others. Asked what is the discount the companies are expecting from the refiners this year, sources said it would depend on the quantity of the products purchased.

Meanwhile, RIL has sought a level-playing field and approached the Government to extend compensation similar to that extended to PSU retailers for selling petrol and diesel at below cost prices.

According to sources, both RIL and Essar have approached the Petroleum Ministry seeking compensation of almost Rs 1,000 crore either through oil bonds or an equivalent financial instrument for the losses incurred by them.

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